Correlation Between Multipolar Technology and Erajaya Swasembada
Can any of the company-specific risk be diversified away by investing in both Multipolar Technology and Erajaya Swasembada at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Multipolar Technology and Erajaya Swasembada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multipolar Technology Tbk and Erajaya Swasembada Tbk, you can compare the effects of market volatilities on Multipolar Technology and Erajaya Swasembada and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Multipolar Technology with a short position of Erajaya Swasembada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multipolar Technology and Erajaya Swasembada.
Diversification Opportunities for Multipolar Technology and Erajaya Swasembada
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Multipolar and Erajaya is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Multipolar Technology Tbk and Erajaya Swasembada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erajaya Swasembada Tbk and Multipolar Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Multipolar Technology Tbk are associated (or correlated) with Erajaya Swasembada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erajaya Swasembada Tbk has no effect on the direction of Multipolar Technology i.e., Multipolar Technology and Erajaya Swasembada go up and down completely randomly.
Pair Corralation between Multipolar Technology and Erajaya Swasembada
Assuming the 90 days trading horizon Multipolar Technology Tbk is expected to generate 5.72 times more return on investment than Erajaya Swasembada. However, Multipolar Technology is 5.72 times more volatile than Erajaya Swasembada Tbk. It trades about 0.18 of its potential returns per unit of risk. Erajaya Swasembada Tbk is currently generating about -0.16 per unit of risk. If you would invest 1,540,000 in Multipolar Technology Tbk on September 1, 2024 and sell it today you would earn a total of 600,000 from holding Multipolar Technology Tbk or generate 38.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multipolar Technology Tbk vs. Erajaya Swasembada Tbk
Performance |
| Timeline |
| Multipolar Technology Tbk |
| Erajaya Swasembada Tbk |
Multipolar Technology and Erajaya Swasembada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multipolar Technology and Erajaya Swasembada
The main advantage of trading using opposite Multipolar Technology and Erajaya Swasembada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multipolar Technology position performs unexpectedly, Erajaya Swasembada can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erajaya Swasembada will offset losses from the drop in Erajaya Swasembada's long position.| Multipolar Technology vs. Multipolar Tbk | Multipolar Technology vs. Astra Graphia Tbk | Multipolar Technology vs. Matahari Putra Prima | Multipolar Technology vs. Ramayana Lestari Sentosa |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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